Video More video In the first of Five Tips’ three-part series, CNN's Gerri Willis reports on how to begin cleaning your credit. Play video

NEW YORK (CNN/Money) - There is a lot going on right now that could affect your credit.

You could be one of the nearly 150,000 ChoicePoint victims whose identities were stolen. Or maybe you're deep in dept. And new legislation being debated on Capital Hill today could tighten the rules for personal bankruptcy -- eliminating your way out of debt. That in turn can worsen your credit.

Take a deep breath. It's time to clean up your financial act. In the first of our Top Five Tips' three-part series, start your cleaning with your credit.

According to the 2005 Identity Fraud Survey Report conducted by Javelin Strategy & Research for the Better Business Bureau, an estimated 9.3 million Americans become the victims of identity theft in 2004.

As we learned from ChoicePoint, you can't prevent identity theft with just a shredder. Beth Givens, director of the Privacy Rights Clearinghouse, says keeping an eye on your credit report is your best defense.

Get your free credit report. The Fair and Accurate Credit Transactions Act (FACTA) is gradually rolling out the right to each consumer for one free copy of his or her credit report from each of the three credit bureaus per year. Check out www.annualcreditreport.com or call 1-877-322-8228.

Right now, residents of Western States: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming are eligible. Starting tomorrow, March 1st, residents of the Midwest can get their free credit reports. And by September 1st, the entire country will be eligible for their free credit reports from the three major credit bureaus: Experian, TransUnion, and Equifax.

Your credit report is basically your credit history. The credit bureaus write up your report based on any information they received about you from companies that gave you credit in the past. Any late payments you made to utilities, hospitals, credit cards, mortgages or landlords might be on there.

You credit score, sometimes called a FICO, is based on all that information. You actually have three different credit scores -- one for each of your credit reports from the three credit bureaus. Scores range from 300 to 850.

Beth Givens, director of the Privacy Rights Clearinghouse, says, ideally you want your score to be well above 620, that's a drawing line for creditors. Your credit score helps them determine how credit-worthy you are. If you have a low score, you will have to pay more for credit.

In other words, the credit card company may charge you a higher interest rate on your delayed payments or your bank may charge more interest on your car loan. To learn more about the calculations behind a credit score, or FICO, go to www.MyFICO.com.

If your credit score is really bad, because you were the victim of identity theft or you are deep in debt, you may be not be able to borrow at all. A bad FICO can also hurt you as you apply for a job or a professional license. Therefore, it's imperative that you improve a bad score, no matter your circumstance.

As the victim of identity theft, you face a real mess. You may have thousands of dollars in charges made to a credit card you never saw. While your name is on the account, you won't be held liable for those charges. However, you are burdened with having to clear your name.

Make sure that during the whole process you keep a detailed log of all the institutions or people you contacted, including dates, times, names and phone numbers. The Privacy Rights Clearinghouse recommends you also take note of the amount of time you spend and any expenses you incur during the process in case you are able to seek restitution. Send any correspondence by certified mail and keep copies of all your records.

Another benefit of FACTA is that you now only have to call one of the three credit bureaus to alert them you are a victim of ID theft.

Ask that a fraud alert be placed on your files. That means the credit bureaus are supposed to notify you in case any company is trying to access your report in order to give you credit (that's when a thief is trying to open a card in your name). Your fraud alert lasts only 90-180 days: put it in writing you want it extended to seven years. In California and Texas, you can also put a security freeze on your reports that will not allow anyone to see them besides you and institutions that already have.

Ask the bureaus for names & phone numbers of all the credit grantors who opened accounts in your name that were fraudulent. Call each one. Creditors and debt collectors will likely ask you to fill out fraud affidavits. The FTC offers one that most will accept on its Web site.

If your accounts have been used fraudulently, have your bank issue new cards and numbers. Report your identity theft to your local police or sheriff's department, making sure your police report lists all the fraudulent accounts. Of course, get a copy of the report. You should also get the phone number of your investigator and give it to the creditors and others involved in your case.

Credit trouble brought on by debt can be just as tricky to get out of. Your first step is to understand how far in debt you really are. Credit card debt is one of the easiest debts to fall into because it's the easiest way to get credit.

According to the Consumer Federation of America, more than 80 percent of all households have some credit card debt. Of them, the average debt is $12,000. And 10 to 15 percent of households with credit card debt are barely able to pay it off.

Steven Brobeck, executive director of the Consumer Federation of America, says that's because many people think of paying off their credit cards in terms of minimum payments. You need to remember that you have to pay the balance.

In order to get out of credit card debt, you need to decide what avenue to take. According to Brobeck, a good rule of thumb is, "If you can't develop a plan to pay off your credit card debt in a year and at the same time meet your other debt obligations, you probably need help."

If you are having difficulty finding the means, contact the National Foundation for Credit Counseling to find your local non-profit credit counselor.

If you think you can do it on your own, call the bank that issued your card and inform them of your plan or ask them to help you design one. They will be more understanding of your situation when you have expressed concern. Help yourself chisel away at that debt by putting away your credit cards and paying with cash. You may even have to take more drastic measures like downsizing your lifestyle to complete your goal of getting rid of that debt.

Your credit report keeps track of your financial safety and where you stand financially. Even though you only get one free report a year, checking your credit once annually is not enough.

Givens recommends that you always check your credit report before shopping for credit, say by buying a car or refinancing a mortgage. You should also check it twice more a year beyond that. If you aren't shopping for credit, Givens recommends you check your report three times a year by checking one bureau's free report every four months.

Gerri Willis is a personal finance editor for CNN Business News and the host for Open House. E-mail comments to 5tips@cnn.com.